In 2021 China rapidly grew its sanctions program, the US and EU renewed focus on corruption and human rights abuses globally, the US increased its crypto offensive, and Iran was not a major focus for the first time in perhaps a decade.

But first, what changed among top sanctioning countries?

The total number of designations by the UN and Australia actually fell in 2021, largely through delistings of terrorism-related parties. Otherwise, the total numbers of sanctions among major designating countries trended upward slightly.

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The top locations for new designations reflect 2021 hotspots, including: 

1. Belarus: 331 new designations, pertaining to the ongoing crackdown on opposition and migrant crisis;

2. Russia: 138 new designations, pertaining to opposition crackdowns, election interference, and actions vis-a-vis Ukraine;

3. Myanmar: 119 new designations, pertaining to that country’s February military coup against the civilian government and resulting unrest;

4. Iran: 94 new designations, largely pertaining to late-Trump Administration designations; and

5. China: 91 new designations, pertaining to Xinjiang human rights and Hong Kong democracy erosion.

Sanctions on China Lead to Tit-for-Tat

A major rift between the West and China is clearly visible in 2021 sanctions data, highlighted by designations against Chinese parties by the West over human rights abuses in Xinjiang that started with a coordinated announcement by Canada, the EU, UK and US in March. 

The US also announced sanctions against Chinese parties in response to repression in Hong Kong, the production and distribution of fentanyl (a potent synthetic opioid which exacerbated the US drug crisis), and facilitating financing and procurement for Iran and North Korea. 

US-China conflict is also visible in the Chinese Military-Industrial Complex (CMIC) sanctions list, which the Biden Administration expanded in June. The designations are on OFAC’s Non-SDN list, meaning that the entities are not blocked, but US persons are barred from investing in them. The CMIC list includes companies involved in China’s defense industry and surveillance industries.

China vocally opposed human rights sanctions by the US and Europe and adopted a counter-sanctions law in June. Beijing’s sanctions program, which started in 2018, targets European, American, and Canadian government officials and entities as well as NGOs, researchers and activists. Our partners at Atlantic Council covered China’s sanctions regime in detail in June. Read more here.

In 2022, China-related designations and Chinese retaliation will continue as a result of increased Brussels-Washington cooperation vis-a-vis Beijing and US legislation adopted in December that banned imports from Xinjiang involving forced labor.

Western Coordination

The West imposed sanctions together on Myanmar and China in March, Belarus in June and December, and human rights abuses in December. The US, EU, UK, and Canada have also coordinated messaging and press releases and will coordinate designations regarding Russia, depending on Moscow’s actions in Ukraine and Kazakhstan.

Human Rights & Anti-Corruption Sanction Increase

The use of human rights-related sanctions programs, often paired with anti-corruption components, expanded in 2021. The US and UK increased their use of Global Magnitsky (GLOMAG) programs by 74% and 49%, respectively, and the EU released their first designations under their human rights sanctions regime. 

Australia passed its own human rights sanctions law in December (though it has not announced designations to date). Canada already had a law targeting targeting human rights and corruption, but did not add any designations last year.

Complementary to GLOMAG designations, the Biden Administration announced a new anti-corruption strategy in December which prioritizes additional regulations, both domestic- and international-facing, to reduce illicit finance and money laundering. Policies building on this strategy over the next year will almost certainly lead to new designations across human rights and corruption, and feature additional guidance for the private sector. We previously covered human rights-related sanctions regimes in detail in a post in December. Read more here.

Crypto: Only US Sanctions

The US remains the only jurisdiction to sanction crypto currency wallets (the unique address for each crypto asset holding, similar to a bank account number). In the past year, Washington rapidly expanded its sanctions focus on the use of crypto for illicit finance, including financing of terrorism and ransomware.

The US first designated digital wallets in 2018, and the number of designations has since grown to over 170 sanctioned wallets. Notably, 95 of those designations were made just in 2021, more than doubling prior designations.

The US designated crypto currency exchanges for the first time in 2021, targeting two exchanges in the fall for laundering proceeds on behalf of ransomware attackers.  Combined with the release of a crypto industry advisory released by OFAC in October, the digital currency space will remain a priority target for US designations in 2022.

Colombia, Iraq Dominate Delistings

Delistings in 2021 were heavily skewed by US action on designees in Colombia. On 30 November, the US State Department announced that the FARC was removed from its international terrorist organization list, and Treasury followed with delisting announcements on 1 December and 30 December. 

The UN, EU, Australia, France, and UK removed 121 designees in Iraq (many of which were initially imposed during the US-led invasion in 2003), with significant overlap between in the respective delistings.

Aghanistan: Aid Relief Higher Priority Than Designations

Notably missing from top designee locations in 2021 is Afghanistan, despite the Taliban takeover and US withdrawal in August. There were only 17 new designations targeting parties in the country, including 9 by France and 6 by the US. This was previously covered in a review of sanctions on Taliban leadership. 

However, Afghanistan remains subject to a number of wide-ranging UNSC sanctions resolutions targeting the Taliban, some of which have been in place since the 1990s. In response to the developing humanitarian crisis, the UN passed a resolution exempting aid-related activity in December and the US published multiple licenses authorizing humanitarian aid.

Ethiopia: Absence Raises Questions

Both Ethiopian government-aligned and Tigray-aligned forces have been subject to credible allegations of human rights abuses, perhaps contributing to limited interest in sanctioning one party over the other. The US announced a new sanctions program covering the conflict in September, but only 6 parties have been designated to date (all located in neighboring Eritrea), including one individual involved in the conflict who was designated under the existing human rights program, GLOMAG, in August.

Areas of Continued Pressure

Belarus

Western partners’ coordinated Belarus sanctions contributed to the country’s top position this year. The Lukashenko regime’s continued repression of the opposition and facilitation of a migrant crisis on its borders with EU members drove designations.

Russia

Russia remained a major target of sanctions in 2021. Multiple designation justifications were used in new listings, including: the 2020 poisoning and January arrest of opposition figure Alexei Navalny, human rights and corruption, US election interference, the invasion of Ukraine, and state-sponsored or sanctioned cyber activity.

Myanmar

The military’s coup in February led to an immediate response from major designating countries, which continued throughout the year and is likely to expand in 2022.

Iran

The US implemented the most sanctions on Iran compared to partner countries, the majority of which were announced in January under the outgoing Trump Administration. The Biden Administration did not remove these Iran designations, but has paused large new sanctions tranches as it continues to negotiate with Iran to revive the nuclear deal.

Predictions for 2022

Crypto: Crypto-related sanctions will double in 2022. The US significantly increased these designations in 2021, has a dedicated cyber sanctions program, and existing cyber sanction frameworks in the EU and UK enable these jurisdictions to act similarly. Efforts to target sanctionable cyber-related activities, from ransomware targeting private companies to state-backed hacking efforts, will lead to scrutiny of crypto assets.

Kazakhstan: The US and Europe will impose human rights sanctions against Kazakh security officials. Protests have turned violent in some cases, with protestors burning government buildings, and the government has responded by firing into crowds, with the President stating that "Whoever does not surrender will be destroyed. I have given the order to law enforcement agencies and the army to shoot to kill, without warning."

The US government has previously sanctioned security officials for firing into crowds of protestors, in Iraq, Iran and Syria. In one example, Treasury even specifically cited it as a reason noting that it “designated three leaders of Iran-backed militias in Iraq that opened fire on peaceful protests, killing dozens.”

Sanctioning Kazakh security officials allows the Biden administration to take action, while also not antagonizing Russia, and inflaming the dangerous situation along the Ukrainian border. An action that would inflame tensions, for example is the US sanctioning the head of Russia's delegation to Collective Security Treaty Organization (the Russian-led force that entered Kazakhstan).

Corruption: Corruption sanctions will be prioritized in 2022 as part of the Biden Administration’s anti-corruption strategy. GLOMAG, which features both human rights and anti-corruption components, was already the most popular program in 2021, and will be the vehicle through which new sanctions will be implemented. An example of what will come is OFAC’s June action where it sanctioned a network of 68 criminal individuals and entities in Bulgaria.

Methodology

The data used in this analysis is based on all entries into sanctions lists in Australia, Canada, EU, France, Russia, Switzerland, UK, UN, and US and covers 1 January 2021 through 31 December 2021. This analysis excludes embargo-type sanctions programs which target an entire industry or country. 

Location data is based on information available in the list source and is enriched based on Castellum.AI’s proprietary enrichment process. The location data may constitute a residence or registered address. For example, a designated company with an address in the UK may be registered at that address but subject to sanctions for activities outside of the UK’s jurisdiction. For reasons both geographic and political, all entries related to Hong Kong and Macau have been consolidated into China. Notably, entries in the source lists from Canada and Russia do not include location data for designees and as such are excluded from all location-based analysis.

In the case of designations by China, the government has not developed a unified sanctions list as of the time of writing. Sanctions are announced ad hoc in press statements by the Chinese Ministry of Foreign Affairs, which Castellum.AI captures and enriches. 

Castellum.AI obtains global sanctions information from primary sources, and then proceeds to standardize, clean and enrich the data, extracting key information like IDs and addresses from text blobs. Castellum.AI enriches as many as fifteen separate items per entry. This analysis is based on the enriched primary source data that populates our database. The database consists of over 900 watchlists, covering over 200 countries and eight different categories (sanctions, export control, law enforcement most wanted, contract debarment, politically exposed persons, regulatory enforcement, delisted, and elevated risk). Castellum.AI checks for watchlist updates every five minutes directly from issuing authorities.

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